Nama a monument to greed that created crisis, Burton tells Humbert summer school

The NAMA Bill rests on one particular clause Section 58 which sets out the rules for valuing the bank loans. It is a shoddy piece of work that does no credit to the Minister.

It could hardly be otherwise as Brian Lenihan is attempting, like Janus of the ancient Roman myth, to show two faces to the world looking in opposite directions.

One face is the Minister who needs to insist on the protection of the public interest. So the clause sets out current market value, however diminished, as a principle. That is what the former Swedish Minister Mr Lundgren recommended in his evidence to the Finance Committee. The results from AIB and the evidence presented in some of the High Court cases show just how heavy a discount is properly called for.

But Minister Lenihan also presents a different Janus face, reflected in a second basis of valuation contained in Section 58, a potentially bogus concept called Long Term Economic Value, which is the convenient cover he and Mr. Cowen use for a policy to pay way over the odds for the banks’ dodgiest loans on the pretext that the assets so acquired have an enduring value that is not reflected in the current market. That is political and economic mumbo jumbo

‘I have been reading remarks by Simon Johnson, a former IMF official with long experience of economic crises. This is what he has to say:
the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis. Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them over-reached in good times and took too many risks’.

Sounds familiar.
So how does the IMF judge a Government’s resolve?
The IMF staff looks into the eyes of the Minister of Finance and decides whether the government is serious. The fund will give a country a loan but first it wants to make sure the Minister is ready, willing, and able to be tough on some of his friends. If he is not ready to throw former pals to the wolves, the IMF can wait.
I wonder how an IMF team would judge the capacity of this set of Ministers to face down their old cronies. Would a serious IMF team look at Brian Cowen in the eye and see there a man with the resolve with the determination to show his former friends the door.
Well would he? I think we all know the answer to that. It might have to come to that eventually but first this Government has a mindset that the plain people of Ireland are to be the first in the firing line, the children of Ireland are to be the target of cuts in welfare, in education, in health care before any effort is made to face down the elite that has been the favoured recipient of public largesse, of tax breaks, of easy tax exile status, of Cinderella rules, of public contracts

Fresh mandate needed on NAMA plans

The Fianna Fail NAMA strategy is one massive gamble with public money, a strategy for which they have no mandate.

What is required is a solution that is in the country’s interest, rather than in the interests of bank shareholders. The last thing we need is the Government exposing the taxpayer by taking on risks, based on assets whose values are bloated and over-inflated, all to protect the major banks.

Labour believes that the temporary nationalisation of those institutions covered by the bank guarantee would be the quickest, fairest, most effective and least costly means of dealing with the appalling situation

Nama will do nothing to get credit flowing for Irish businesses

Through greed and mismanagement the private banking sector has failed the Irish economy. Only a state bank can now protect the key national interests of the economy and jobs.

What NAMA will do for us

Labour's Galway West TD Michael D. Higgins feels it may have been a lost opportunity for the public, but remains open minded about NAMA, feeling that, if handled correctly, there could yet be social benefits for the public.

5 August 2009
Galway Independent interview with Joe Higgins TD
http://www.galwayindependent.com/local- ... do-for-us/

Meanwhile, Labour party leader Eamonn Gilmore called for the temporary nationalisation of the banks amid concerns over the Nama plan.
Mr Gilmore said the Government for the last 12 months has “dithered and stumbled” over the banking crisis and with the Greens at sixes and sevens on the issue they should look again at the case for the temporary nationalisation of the banks.

“It is ironic that while Minister Lenihan refuses to consider temporary nationalisation and insists on going the Nama road, he acknowledges that Nama may not work and that the Government may have to take the banks into public ownership eventually.
“Surely it would be prudent to take this action now, rather than taking a huge gamble with taxpayers money on Nama.
“Temporary nationalisation will be the most effective way to sort out the banks, get credit flowing again and ensure the protection of the maximum possible number of jobs, while at the same time minimising the risk to the taxpayer,” he added.

Mr Gilmore said the outcome of this case will have significant potential implications for taxpayers. He said lawyers for the Zoe group have argued that valuations of its properties should remain confidential.

"However, without this sort of information, we will have no way of knowing whether the proposed level of discount the Government intends to offer to the banks on properties under the proposed National Asset Management Agency (Nama) legislation is an appropriate one," he said.

What alternative are Labour proposing and have they costed it?

As regards putting together a costed alternative, Alan points out the difficulty there also:



So there.

http://www.irishtimes.com/newspaper/bre ... king11.htm

Dr Ahearne said Nama must, following EU guidelines, value each loan separately.

What alternative are Labour proposing and have they costed it?

Govt will be reckless if it ignores economists' warnings on NAMA plan

“It is clear from the volume of correspondence being received by TDs, that there is huge public opposition to the NAMA plan. It now seems evident from the statement signed by these 46 economists, representing a wide range of political and economic views, that a majority of economic experts are of a similar view

“The Labour Party has been entirely consistent in our opposition to the NAMA proposal since it was first mooted and we have set out a clear alternative strategy in the form of temporary nationalisation.”